This study demonstrates that CD8+ T cells in the tumor microenvironment display reduced functionality and hyporesponsiveness. TGF-beta contributed markedly to the tumor-infiltrating CD8+ T cells (TILs) reduced functionality, which could be reversed using a small molecule TGF-beta inhibitor. Upon T-cell receptor (TCR) activation, the activation of ITK and ERK kinases were reduced in CD8+ TILs, as compared to splenic CD8+ T cells: TGF-beta inhibitor could reverse this phenomenon. This study demonstrates for the first time the association of the Spred-1 gene, an inhibitor of the Ras/MAPK pathway, with CD8+ TILs and TGF-beta activity. Spred-1 was upregulated in CD8+ TILs and TGF-beta enhanced the expression of Spred-1 in effctor/ memory CD8+ T cells and not in rested/memory CD8+ T cells. Based on these findings, this study supports the hypothesis that TGF-beta mediates an inhibitory mechanism on CD8+ TILs involving TCR-signaling blockade and the upregulation of Spred-1, thus implicating Spred-1 as a potential new target for future anti-tumor immune studies. Tumor-associated antigens are weakly immunogenic. Human carcinoembryonic antigen (CEA) is overexpressed on a wide range of human carcinomas and represents an attractive target for cancer immunotherapy. This study analyzes the ability of a Saccharomyces cerevisiae vector containing the transgene encoding CEA (yeast-CEA) to activate human dendritic cells (DCs) and stimulate CEA-specific T-cell responses. We demonstrate for the first time that treatment with yeast-CEA can activate human DCs, resulting in increases in surface expression of CD80, CD83, CD54, CD58, and MHC class II, and increased production by DCs of IL-12p70, TNF-alpha, IFN-gamma, IL-8, IL-2, IL-13, IL-10, and IL-1beta.We also show that human DCs treated with yeast-CEA can activate CEA-specific T-cell lines and can act as antigen-presenting cells (APCs) to generate CEA-specific T-cell lines capable of lysing CEA+ human tumor cells. Gene expression profiles of human DCs treated with yeast-CEA show increased expression of numerous genes involved in the production of chemokines and cytokines and their receptors, and genes related to antigen uptake, antigen presentation, and signal transduction.